Reefer Trains – Will they change the rail freight transport in India?

Posted in Operations & IT Articles, Total Reads: 3036
, Published on 28 November 2013

Advertisements

This article discusses about how the refrigerator car ( or “reefer”) technology, widely popular in the North American railroad logistics, if used by the Indian Railways to the fullest capacity, can drastically improve the performance of the freight movement across the country thereby reducing the wastage of the perishable goods.

The reefers are designed to carry perishable freight at specific temperatures. In a huge country like India, the concept of refrigerated freight railcars is still in the nascent stage.

Image Courtesy: tiverylucky, freedigitalphotos.net

Indian Railways (IR) is the 5th largest network in the world with the total length of Indian Railway is more than 63000 Km out of which 41% is electrified.

IR earns about 70% of its revenue from the freight movement alone. To meet the growing demand of the freight traffic, the IR planned the Dedicated Freight Corridors which will cater to only the freight traffic. However, most of the freight traffic comprises of bulk goods such as cement, iron ore, coal and food grains. But if we consider about food items, more specifically perishable commodities like fruits, vegetables, milk products, pharmaceuticals etc., Indian Railways loses out to several players in road logistics. The reason is quite simple. IR is still in the initial days of launching refrigerated cars and the opportunity in this field, once unfolded, will be huge.

Figure shown below is a reefer train in China.

Source:http://bccjacumen.com

According to Container Corporation of India Ltd (CONCOR), the importance of cold chain in India is immense because:

Post harvest, food wastage is estimated at 25% of total produce

India is the 2nd largest producer of fruits and vegetable in the world, also the 2nd largest exporter of vegetables.

Huge losses in post harvest of horticulture produce

Allowing FDI in retail in India, the cold-chain market, storage and distribution facilities will no doubt improve the existing conditions. This will in turn enhance the demand for reefers in India. On November 2012, the first ever reefer train of the CONCOR was flagged off from Hyderabad to Mumbai. It carried seven refrigerated containers. Sushant Kumar Mishra, SCR divisional railway manager said that the reefer services from Hyderabad will ultimately help in the growth of export of pharmaceutical products from Hyderabad, expanding the pharmaceutical industries, creating more revenue and demand, and subsequently generating more employment.

For an example, let us observe how floriculture export is affected due to poor infrastructure and logistics system and how it can be improved with better storage infrastructure. Poor storage system and absence of cold storage inhibit the export potential of floriculture. States like Karnataka, Tamil Nadu and Andhra Pradesh are the major production states of flowers. Introduction of reefer trains from these states to Mumbai port can open the export opportunities to many of the Western countries.

The concept of reefer rail cars has been well accepted by all the major railroad companies in North America. Major Class I Railroad players (whose annual carrier operating revenue exceeds $250 million) in North America like BNSF Railway, CSX Transportation, Union Pacific etc. have invested in the cold storage container infrastructure. It makes sense for the better train service because it is greener as compared to trucks. One railcar can equal four truckloads, thus it minimizes carbon footprint and also optimizes cost. Moreover, it offers to be an ideal solution to achieve superior supply chain performance. It is the best way to execute just-in-time inventory replenishment program. Companies can quickly respond to increased demands from customers if they are well equipped to stock their inventory which implies of an efficient cold storage system. Also, reefer can minimize the risk of wastage of perishable goods in case of a long rail freight transport.

The question is ‘Can Indian Railways use reefer technology for its freight corridor?’ There were talks between IR and Carrier Transicold, a division of Carrier Air-conditioning and Refrigeration India Ltd. in 2012 to introduce refrigerated wagons for perishable goods transportation. However, there were no further reports of that deal. As we have seen from the reaction of the CONCOR officials, the expectation from reefer trains is immense. It will be interesting to see how many private players are willing to explore this unmarked territory in Indian logistics space. Can reefer trains revolutionize the railroad logistics industry? It’s quite early to predict, however, future looks very optimistic. So, we better wait and watch.

This article has been authored by Debdripta Sengupta from T.A. Pai Management Institute Manipal